GMAC has announced that they will now offer car loans to consumers with less than a 700 FICO score. WOW. The reality is that the Big 3 have ignored dealers pleas for financing their customers, because a) they had no money to loan b) not giving car loans would pressure congress to give them the bail out cash. They got the cash, so now everyone with a 621 or HIGHER FICO score can get a car loan. Right? Wrong. What they don’t say is now that they have a BANK CHARTER,will they use the FICO AUTO credit score, which heavily factors the consumer’s car loan payment history, or the “middle” score of all three credit bureaus, a general average of how the consumer pays all his/her bills overall? The later could prove to be more beneficial to the car buyer with spotty car payment history but solid mortgage payment status. However, those individuals with housing foreclosures, bankruptcy. medical or heavy credit card debts but good car payment records, could get tripped up on the “middle” score. The winners will be the credit report repair companies that traditionally fix all three bureaus errors, with no particular attention to risk factors of FICO AUTO scores. Add to that issue, many car loan companies have a credit bureau preference, which could affect which car a consumer seeks out, based on the credit bureau he/she shows more favorably. Dave Smith recently purchased a Mazda3 with a 650 Equifax credit score. Having been offered a 17% interest at the Toyota dealership, where his TransUnion and TRW AUTO scores were lower than 650. “The Toyota dealership said their banks like certain credit bureaus and those were not the ones I was highest one. The interest rate on the Mazda3 was 12.99%,” Smith added. GMC needs to make public, exactly which 621 FICO they will use going forward, the AUTO score or the MID-score of the general report. I’m betting they stick to the auto score, as it assess the likely default risk more accurately. Let’s face it, houses can’t be driven across the border (most of the time). BTW, Be prepared taht with car loans for those with less than stellar credit will probably come “tacking” devices that let you know when you are PAST DUE, because the car won’t start! ———————————————————————————— Sarah Lee is a veteran of the automotive industry. She writes on all areas of car and consumer subjects. Her company My Carlady helps save you thousands of dollars and time buying your next car. You can reach her at sarahlee@mycarlady.com,mvides422@gmail.com,carlady@cox.net]]>